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08/31/1998 16:45:02 Rejected Russian PM says plans acting cabinet

(Changes source, adds detail)

MOSCOW, Aug 31 (Reuters) - Russia's acting Prime Minister

Viktor Chernomyrdin, rejected in a bid to be confirmed in office

by parliament on Monday, said he would nonetheless shortly

propose an acting cabinet to President Boris Yeltsin.

"As the situation is extremely grave across all of industry

...in my acting capacity I am now obliged, in a day or two,

depending on what the president does, to put forward proposals

for forming a government," he told the State Duma lower house.

A Kremlin aide said before the vote that Yeltsin would keep

Chernomyrdin on as acting premier, giving the Communist-led

parliament a second chance to accept his nominee next week.

"The country cannot go without a government," said

Chernomyrdin, who was nominated by Yeltsin a week ago, five

months after being sacked as premier.

He needs the Duma's approval to form a fully fledged

government.

Ministries are still headed by those who served under former

prime minister Sergei Kiriyenko, who Yeltsin sacked last week.

At the weekend, Chernomyrdin said he was setting up a

working group to deal with Russia's severe financial crisis. It

included acting finance minister Mikhail Zadornov and central

bank chief Sergei Dubinin, both of whom sat with Chernomyrdin

throughout the debate on his confirmation on Monday.

The group is headed by reformist acting Deputy Prime

Minister Boris Fyodorov.

"Whatever happens, I have to take decisions, because life

goes on," Interfax news agency quoted Chernomyrdin as saying as

he left the Duma after the vote.

He said he would take steps to make sure payments due to

soldiers, students and miners were made.

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